Based on the available data from late 2025, here’s a forecast for the U.S. housing market in the second half of the year:

Overall Market Outlook

The housing market in the second half of 2025 is expected to remain largely stagnant, similar to 2024. Affordability challenges stemming from elevated mortgage rates and high home prices continue to keep both buyers and sellers on the sidelines, leading to low sales volume. While a national housing market crash is not anticipated, home price growth is expected to be minimal and, in some cases, even negative. The market is becoming more balanced as inventory slowly increases, but it’s not yet a buyer’s market on a national scale.

Key Factors and Trends

• Mortgage Rates: Mortgage rates have remained stubbornly high, hovering around the upper 6% range. Earlier predictions of a substantial decrease have not materialized. Experts now forecast that rates will moderate but not necessarily decline in a significant way for the rest of the year. This continues to be the primary factor restraining homebuying activity, as it significantly impacts affordability.
• Home Prices: While a crash is not expected, home price appreciation is slowing down considerably. Some forecasts predict tepid growth of around 2% for the year, while others, like Zillow, project a slight national decrease of less than 1%. This trend varies significantly by location.
  • Price Drops: Markets with greater inventory, particularly in the South and West, are more likely to see prices drop.
  • Price Increases: Popular regions with less new inventory, especially in parts of the Northeast and Midwest, are expected to continue seeing steady price increases, albeit at a slower pace.
• Inventory: Housing inventory has been rising, but this is not necessarily a sign of a healthy market. It’s largely due to sluggish sales, as homes are taking longer to sell, not because a flood of new listings has hit the market. While inventory is up significantly from a year ago, it still remains below pre-pandemic levels. The increase in supply is giving buyers slightly more options and bargaining power.
• Home Sales: Home sales volume is expected to remain at or near multi-decade lows. The “lock-in effect,” where homeowners with low-interest mortgages are unwilling to sell and buy a new home at a much higher rate, continues to keep existing home sales depressed.
• Regional Differences: The national forecast is an aggregate of highly varied local markets.
  • South and West: These regions have seen more substantial inventory gains. While this provides more options for buyers, affordability constraints continue to weigh on demand.
  • Northeast and Midwest: These markets remain tighter with less inventory and relatively steadier buyer activity.
• Rents: Rent growth is expected to remain soft through the end of the year. Some forecasts predict a slight decrease or a minimal increase, making it the lowest annual increase for rents in several years.

Advice for Buyers and Sellers

• Buyers: The market is not as frenzied as in previous years, giving you more options and a little less competition. It’s a “sweet spot” for some, but affordability remains the biggest hurdle. Focus on what you can afford for a monthly payment rather than the home’s price, and be flexible on location and size.
• Sellers: The market is moving out of a strong seller’s market and into a more balanced one. You may see fewer offers and need to be more flexible with terms. Pricing your home smartly is crucial.

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